ECJ gender ruling explained


This will be a pivotal year for many of us when we come to renew our car insurance. The reason? The European Court of Justice’s Gender Directive, which came into force last December. The Directive could also affect how much you’re charged if you take out life insurance, and it could impact the amount of income you’ll get if you buy an annuity. All depending on your gender, of course. So let’s have a look at what’s happened and what effect the changes are likely to have. Essentially, the way insurance companies set their prices has changed thanks to a ruling passed by the European Court of Justice (ECJ) in 2011. Implemented on December 21, 2012, the ECJ’s Gender Directive bans insurers from charging men and women different prices purely on the basis of their gender. Car insurance is one of the main areas affected. In the past, women paid less than men for car insurance because, in general terms, women make fewer claims, and the claims they do make tend to be of lower value. When it comes to life insurance, the statistics show that women live longer. In the past, that mean they paid less than men, because there was less chance of them dying during the term of the product. With annuities (a guaranteed income, paid for life, in return for a lump sum), women always got less for their money because, statistically, they would be in receipt of payments for longer. But the gender ruling says insurers can no longer make assumptions based on gender – that means an end to what’s known as ‘gender-specific underwriting’. So now men and women start off on an equal footing when it comes to calculating their premiums. The statistical evidence about driving safety or longevity can no longer be taken into account. Sounds crazy – but it’s the law!

Why should women pay more?

Many people – including insurance company chiefs and other commentators – opposed the ECJ ruling because they said it would penalise women with an unfair hike in their premiums for car insurance. Insurers say they need as much information as possible to help calculate how much to charge, and they say using gender is reasonable given the statistical evidence built up over years about the differences between men and women. The data indicates that women are less accident prone than men, which has earned them relatively low premiums. With the ECJ ruling in place we have moved from ‘gender-specific’ to ‘gender-neutral’ underwriting. Insurers must work out how much they are going to charge with no reference to the driver’s gender. The principle behind the ECJ ruling is clearly gender equality. The consequence, however, is that women are paying more for their insurance. Younger women in particular are facing steep increases of up to 20% when it comes to renewal. This is because young drivers make the most claims, so insurers are bringing last year’s relatively low young driver premiums up to a higher level this time around.

Is there anything women can do?

There is an argument to say that, if a person warranted a certain level of car insurance premium before the ECJ ruling came into force on December 21, then they should be able to pay a similar amount once the ruling is in effect. For this reason, it is likely that insurers will try to find out as much as possible about an individual’s driving history so as to determine what kind of driver they are. If you can point to a ‘clean’ driving record, with no at-fault accidents or motoring offences on your record, you should be able to secure a realistic premium. It is likely to take some time for the car insurance market to settle down following the implementation of the ECJ ruling – but it seems apparent that the traditional savings enjoyed by women are evaporating as gender equality takes hold. That said, there are a number of actions women (and men!) can take to ensure they get cheap insurance that provides all the protection they require:

  • Shop around. When you use MoneySupermarket’s online price comparison service, you can compare car insurance prices available through over 100 different providers.
  • Boost security. You can secure discounts on your car insurance by fitting an alarm, an immobiliser and a tracking device. You will also pay less if you can park ‘off road’ at night, preferably in a garage but at least on a driveway.
  • Drive less. In crude terms, the more miles you drive, the more likely you are to have an accident. So if you can limit your annual mileage, you could pay less for cover. Always give an accurate figure when your insurer asks how far you drive each year.

For more ways to save on your car insurance, read our money saving tips.

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